Funding Your MBA: 4 Questions You Should Ask Before Taking Out A Student Loan
Undertaking an MBA doesn’t just require an investment of time and energy, it also involves significant financial cost—around $200,000 for some programs, when all factors, such as living costs and salary loss, are included.
Indeed, over half of all MBA candidates say that not having enough funds to pay for their education and having to take on large debts could prevent them from pursuing a graduate business degree—according to GMAC’s 2017 Prospective Students Survey Report.
The rewards of an MBA are plain to see however, with graduates going on to land more senior and better-paid jobs. For many, the return on investment of an MBA makes taking out a loan worth it.
BusinessBecause caught up with Magali Duque from Prodigy Finance, an alternative provider of international post-graduate loans. And, together, they came up with four questions to ask yourself before taking out an MBA student loan.
What do I need to qualify for a loan?
If you’re an international student, going to study overseas, international banks may have difficulty lending to you and rates may not be in your favour. It’s also likely that you’ll need a co-signer or collateral to have access to a loan. Local banks may refuse you altogether.
No fear: peer-to-peer lending platforms like Prodigy Finance have stepped in to aid MBA candidates looking to study abroad. Established by three INSEAD MBAs who experienced the difficulties of financing an international degree first-hand, Prodigy Finance’s borderless credit model gives international MBA and master’s students—from 118 countries worldwide—access to the loans they need to study abroad.
“Prodigy Finance was born to help international students,” says Magali. “We don’t require collateral or co-signer, and this alone is a significant reason why students choose to go with us.”
What is a good loan offer for me?
The loan offer is comprised of the loan amount, repayment period and interest rate. Candidates need to look at these three factors carefully and in the context of their own financial situation—a good offer for one student might not be the right fit for another.
It’s important that students consider what savings, liquid capital and assets they have access to and what they would like to leverage. Sometimes, it can make sense to spend more upfront and take out a smaller loan. Other times, it makes sense to take out a larger loan, even with smaller savings, if a graduate feels they’ll be able to repay it quickly with their post-degree job.
“Students often compare loan offers between each other, but it’s very contextual as to what is a good offer,” Magali explains.
What currency will I be earning when I graduate?
Prodigy Finance loans come in US dollars, euros or British pounds depending on what school you attend. Whatever currency the loan is taken out in, is the currency that needs to be paid back.
“International students need to know what their currency choice means in terms of repayment,” advises Magali. “A student from India or Brazil studying in Europe, depending on their circumstances and exchange rates, may prefer take a loan in US dollars so that they can repay in dollars rather than in euros, if presented with both options.”
What advantages are there to different loan platforms?
Historically, banks have been more open to career and professional development loans, but these have reduced in number.
In recent years, crowdfunding and peer-to-peer lending has increased in popularity. Prodigy Finance’s community aspect gives borrowers access to a global network of smart students attending top tier business, engineering, law and public policy students.
“We understand the value of the education our borrowers are about to receive,” Magali explains. “Unlike traditional banks, we look at numerous variables, including where the student is headed in their career as well as what their future earnings will likely be.
“We also engage our community with different events—students in Barcelona talk to students in the US,” she continues. “Our borrowers get access to alumni at a range of top universities around the world.”
An alternative lender like Prodigy Finance is just one of the options out there. Interested in learning more about how to fund your b-school aspirations? Read on for more information.
Whether you’re considering an MBA, EMBA, or Master’s program, read more content like this and get practical resources to help your business school application on BusinessBecause.